In Benin, financial service providers have invested heavily in expanding and/or densifying their agent networks. Between 2016 and 2017, the number of registered agents doubled, from 20,000 to 40,000. However, only 25,000 of those agents are active, according to a state-of-the-market report by UNCDF. Moreover, agents encounter a number of difficulties in carrying out their activities, as UNCDF described in an earlier blog: insufficient liquidity, poor connectivity and access to infrastructure and misinformation, among others.

To better understand the challenges agents face in Benin, UNCDF commissioned Amarante Consulting to perform research in five rural areas: Dassa-Zoumè, Malanville, Sô-Ava, Tanguiéta and Zangnanado. The qualitative study, conducted through focus groups and in-depth interviews with agents, customers and some distribution managers of the main providers in the country, identified five main obstacles for rural agents.

1. Low financial capacity of agents to start the business

For the agents interviewed during the study, challenges in the distribution of digital financial services (DFS) emerge at the very beginning of their business activity. The delays in obtaining the required administrative documents—due to the remoteness of some public administration offices—and the difficulties in raising the capital required by mobile network operators (MNOs) are the first obstacles to starting the agent business. Indeed, few agents manage to raise the CFAF 200,000–CFAF 300,000 (US$340–US$510) required by DFS suppliers for initial capital, let alone have the funds necessary to handle the oftentimes high-value transactions.

Liquidity constraints are an issue on busy days, as one Zangnanado agent describes:

"Everyone needs money to increase their working capital in order to better satisfy customers. When there are ceremonies, for example, we can't satisfy customers because there are insufficient funds."

To address this challenge and strengthen agents’ financial capacity, MNOs (in partnership with financial institutions) could potentially offer loans to agents. In the same vein, emergency digital credit (based on an analysis of transactional history, for instance) could help agents avoid service breakdown during periods of high traffic. Implementation of such solutions would help to resolve the crucial issue of liquidity management in rural areas.

2. Seasonality of economic activities

The seasonal nature of economic activities in Benin has a direct impact on agents' businesses. An agent in Sô-Ava, a lake area in southern Benin, explains:

"During the rainy season, many go to the mainland. In these times, when you go to the sea, you can't find any fish. This is what impacts the activity. Therefore, when there are no fish, there is no sale to receive money from the other end."

In rural agricultural areas, farmers have difficulty selling their crops during the rainy season, since transportation is difficult. In areas where fishing is the main income-generating activity, fishers often leave their fishing trips empty-handed during the rainy season. People’s productivity and income fall, leading to a decrease in the volume of transactions processed at agent points.

3. Poor access to electricity

Another major challenge faced by agents in rural areas of Benin is the lack of electrification. This situation means that agents must make significant initial investments to acquire generators or solar equipment. These enormous financial burdens on micro and small entrepreneurs make most of them reluctant to set up points of sale in non-electrified areas, to the detriment of customers and their needs.

Nevertheless, agents are increasingly interested in pay-as-you-go systems offered by renewable energy providers, not only to benefit from the equipment for their own activities but also to serve as ‘thought leaders’ for their community members. They see it as an opportunity to expand their services to improve their income in periods of low activity.

4. Deficiency of training and monitoring

An agent from a focus-group discussion in Dassa-Zoumè summarizes the great need by agents for training and daily support in business management: "Often it is a friend who trains his friend; no one comes to train us... We mostly learn from our own mistakes.”

Most of the agents in the study reported having received only one training session at the start of their business activity, often provided by a relative or another agent who was already operating. As a result, the agents are insufficiently equipped to serve customers and agents report that they make many transaction errors in the early stages of operation. Moreover, the agents indicated that the assistance processes to resolve those errors are relatively long and painful.

Agents expressed a wish for post–start-up refresher training from service providers. They also hope for faster processing of any transaction-related requests and free calls to providers’ call centres.

5. Glaring lack of marketing materials

While marketing and communication are rightly seen as two of the main strengths of MNOs, it seems to be lacking for mobile money agents in rural areas of Benin. For most agents, the visibility elements received at the start of their business activity (such as price list and stickers) do not cover their needs and are not replaced when faded or damaged by weather. This gap affects Beninese agents’ business since, for rural populations, advertisement at points of sale is crucial and helps to strengthen confidence in the services and the agents. Faced with this situation, some agents invest in painting their shop with the provider’s colours or in producing the advertising materials themselves—a solution that is often quite costly for them, due to their low financial capacity.

The ideal solution for agents would be to receive adapted visibility elements that are sufficiently resistant, such as flags. When discussing how to overcome this challenge, agents also mentioned other distribution models (such as the use of aggregators in the value chain) to reduce the often long and complex interactions with MNOs. For example, aggregators in some other countries facilitate the deployment of agents and the processing of their operations, thanks to new technological solutions.

How can providers implement these solutions to make digital finance distribution effective in rural areas of Benin?

DFS providers can count on the support of UNCDF, which will continue its partnership with various actors in the Beninese ecosystem, using digital technology to implement solutions to address these challenges and ultimately to accelerate financial inclusion and economic empowerment of vulnerable groups and by doing so contribute to the SDGs.